Taiwan will evaluate the potential effects of proposed US tariffs on its semiconductor industry, Economy Minister Kuo Jyh-huei said on April 15.

The US is considering tariffs on imported semiconductors and pharmaceuticals due to national security concerns over foreign reliance.

Taiwan, a major chip supplier to the US, plans to engage in talks with Washington to address the issue and promote fair competition.

Kuo said the government will simulate the potential impacts of the tariffs and negotiate with the US.

“The level of chip tariffs will be the outcome of talks,” he said, without giving further details.

🔗 Source: Reuters

🧠 Food for thought

1️⃣ Taiwan’s evolving ‘silicon shield’ strategy mitigates tariff risks

Taiwan has historically benefited from trade tensions, gaining $4.2 billion in diverted trade during previous US-China disputes, with over $2.8 billion coming from increased business in communication equipment and office machinery 1.

TSMC’s massive $100 billion investment plan to build five new fabrication plants in the US appears strategically timed, as it was announced shortly before potential 32% tariffs on Taiwanese imports were discussed 2.

This investment serves as diplomatic insurance. While Taiwan faces significant tariff threats, its semiconductor industry remains exempt from these tariffs, highlighting the effectiveness of this preemptive investment strategy 3.

Experts describe this as an evolution of Taiwan’s “silicon shield” concept. Rather than concentrating manufacturing solely on the island, TSMC is distributing operations globally while maintaining its most advanced technology in Taiwan 4.

The approach has drawn political debate within Taiwan, with some opposition lawmakers concerned about undermining the traditional “silicon shield” protection that Taiwan’s semiconductor dominance provides 4.

2️⃣ Strategic investments balance domestic leadership with global expansion

TSMC has explicitly stated it will maintain its technological leadership in Taiwan despite expanding globally, reflecting a careful balancing act to preserve its competitive edge 5.

The company’s $100 billion US investment will fund three new fabrication facilities, two advanced packaging plants, and a research center in Arizona, projected to create 40,000 jobs while strengthening Taiwan’s position in the global semiconductor ecosystem 5.